Advice self employed loss

Supermom

Hello

It's a bit complicated but maybe someone will be able to advise. My sister works full time and is desperately trying to pull her life together after her husband did a runner and left her to bring up their kids. He's disappeared abroad and provides no financial assistance, she is working, studying and trying to start up her own business so she can repay the debts and start again.

Currently she is entitled to a small amount of housing benefit (which helps loads and for which she is incredibly grateful, having worked her whole adult life) but as I said she is wanted to start her own business, having done a business plan with the local business start up help group it would likely make a loss in the first year (high set up costs) but going forwards would be profitable and would mean she would no longer require any top up, either child tax credits or housing benefit.

Now we know she can off set any loss against earning for child tax credit purposes this is explained on the tax credits site but can she do this also for housing benefit? For example earnings £300 but loss £30 would the calculation used for housing benefit take this into account?

Sorry if I've not explained myself very well I really struggle to get my head around these things.

Many thanks in advance for reading.

Housing_Benefit_Officer

For Housing Benefit purposes a loss in self employed earning can't be offset against any earnings from another job.

So if she earned £300 in wages and made a loss of £30 in self employed earnings her income for Housing Benefit purposes is £300.

Marktheshark

If it can not hit the ground running she is better looking for something else.

Supermom

Thank you housing benefit officer, really helpful. She has invested so much time and energy so if she needs to tighten her belt a bit more I know she will. So proud of how determined she is.

And no Marktheshark she is not better looking for something else, most business make a loss in their first year. She won't give up on her dream and all her hard work just because it will be difficult for that first year. She's still going to be working, she'll just be working twice as hard.

Thanks again.

shegirl

Supermom wrote: »

Thank you housing benefit officer, really helpful. She has invested so much time and energy so if she needs to tighten her belt a bit more I know she will. So proud of how determined she is.

And no Marktheshark she is not better looking for something else, most business make a loss in their first year. She won't give up on her dream and all her hard work just because it will be difficult for that first year. She's still going to be working, she'll just be working twice as hard.

Thanks again.

Has she looked into a business start up loan to help her? These are available now, through certain places, as a personal loan for business purposes and will give her a business mentor in a related area too. They can be found through googling for start up loans or through Virgin Start Ups. They are a lot simpler to get than traditional business loans and if she's successful it will help her start up and give her a bit of a buffer

shegirl

Also, a lot of small businesses are recommended to try crowd-funding these days too. You can raise money for start ups without having to pay anything back but those who give money tend to like something back ie a service, product or something back in the future when the business is doing well

Supermom

Hi shegirl
Thanks you, I know she's been getting some advice but not sure where from. I've printed out this thread so she can take a look.

Many thanks, it's really appreciated.

curty510

Good on your sister. I wish her luck in her new venture.

leveller2911

Supermom wrote: »

And no Marktheshark she is not better looking for something else, most business make a loss in their first year. She won't give up on her dream and all her hard work just because it will be difficult for that first year. She's still going to be working, she'll just be working twice as hard.

Thanks again.

Why do people consistently say on here that "businesses make a loss in the first year"?. I've been in business for over 20 years and not one person I know who set up their own business in that time made a loss in the first year.. Why are people so negative.

densol_2

leveller2911 wrote: »

Why do people consistently say on here that "businesses make a loss in the first year"?. I've been in business for over 20 years and not one person I know who set up their own business in that time made a loss in the first year.. Why are people so negative.

Because you can take advantage of first year 100% capital allowances and also annual investment tax allowances, which will create a paper loss in the first year and then lead to profits in subsequent years. It's not being negative - its being savvy in the business world ( and yes it can lead to tax credit advantages )

tomtontom

densol wrote: »

Because you can take advantage of first year 100% capital allowances and also annual investment tax allowances, which will create a paper loss in the first year and then lead to profits in subsequent years. It's not being negative - its being savvy in the business world ( and yes it can lead to tax credit advantages )

Not everyone tries to play the system densol - and let's not confuse savvy with downright immoral